You're right. We've been taught to spend our way out of recessions or contractions but now we're an asset backed nation that's had it's largest asset seriously devalued, our homes. We've racked up debt and don't have the money to spend and nothing to borrow against to get more.

The only solution is to devalue the currency and shift wealth from the nation's wealthiest to the middle class consumer. That's my rational approach.

The next step would be to explain larger problems. How we should all live within our means, how we should keep a close eye on income inequalities, and how we should only borrow when we need to buy a house or when we think that we'll be able to invest the money in some way as to make more money than the original amount plus interest owed (aka: productivity).

In my opinion - something did our country a great disservice and it should be eradicated immediately. Whatever frame of mind led to this needs to be found and shown for what it can lead to.

What good is this disaster if the American people can't learn from it. We all need to learn that some type of behavior led to this. We all need to agree on it, acknowledge it, validate it, agree with the consequences, and grow. I think we're all still confused on why it happened and what needs to be fixed. Once the vast majority of us - 95% can agree that certain causes were responsible - will this disaster be worth it. We need to be united and confident.

Anything that can bring the country closer would be a good thing right now.

We all need to learn that some type of behavior led to this. We all need to agree on it, acknowledge it, validate it, agree with the consequences, and grow. I think we're all still confused on why it happened and what needs to be fixed.

I think this makes good sense and I think we must look deeply into the causal factors and not accept superficial explanations or rest at blaming a few individuals. I also think we (the public) can expect obfuscation from those who have the most to lose from investigation. The vested interest in protecting the system and the private gains that have been made arising from many quarters will conspire to limit the depth of investigation.

Refering to the item I posted yesterday as an example of how not to conduct an investigation, one can see that this investigation or questioning is half hearted, for appearances sake and set up to fail. It's a typical sound byte driven gong show that allows politicians to say that they have taken action.

I think looking at the historical perspective and contexts given more than ever a lack of absolutes should become apparent.

Reducing the influence of poor thinkers (in some cases through blame in failings) is imperative to the growth of thought in all areas of human society not least the economy. In this sense there is no right way to find the perfect market just as there is no such thing as the perfect market, there is merely the evolution of the idea of it in perspective of what has been proven untenable.

Americas strong foundation in capitalist mentality will not be so easily abandoned, or even debated seriously. In reality I think that a stiff mix of Liberalism via Obama is fine wine right now, considering the last 30 years of Conservative pickles that have been passed for peaches. Just don't expect anything revolutionary.

The market has been shaken badly, toxic security mixed in with the creamy assets leaving the world with few practical techniques for distilling the broth. What is needed more than ever is the strength of an idea that will return confidence to the west and restore function to a poorly conceived market idealism. This idea may be radical only in its rejection of neo-liberalism, a rejection in my mind which appeals to common sense more than anything.

If you want to talk about a serious shift in mentalities peak oil is your subject. The relative wealth of the American should be proof enough of the power of the capitalist system in spite of its severe social inequalities and frequent failings. While both vital resource depletion and the capitalist system are obviously related, and should not be ignored as in anything but a highly meaningful relationship, this chapter does not relate the two in any relevant way.

Last edited by Grim on Tue Feb 03, 2009 10:52 pm, edited 3 times in total.

Comacho and Grim, the new president could stand to hear what you've had to say above.

I do worry that Obama will find himself captive of the system he's been criticizing. Already it seems that his party is trying to press an advantage with the so-called stimulus package, instead of showing the bi-partisan spirit Obama promised. He needs to be very tough with the Democrats. Their party, by the way, is surely as involved in the financial mess--if not more so--as the Republicans.

What is needed more than ever is the strength of an idea that will return confidence to the west and restore function to a poorly conceived market idealism. This idea may be radical only in its rejection of neo-liberalism, a rejection in my mind which appeals to common sense more than anything.

Rejection of neoliberalism may look like common sense, but it is not good sense. Neoliberalism is an analytical evidence-based approach to economic policy. Its foundations in the work of Adam Smith provide the only successful and sustainable model for economic growth. It was only when China enbraced neoliberalism under Deng Xiao Ping that it found the secret of economic growth. The alternative to neoliberalism is socialist planning, which distorts the allocation of resources on political grounds. Some socialist distortion is necessary for social equity, but such distortions tend to undermine performance incentives. The real problem is how to regulate a free market. Clearly, the USA New Deal-type incentives for home ownership have gone spectacularly bust, and Greenspan was asleep at the wheel while the economy ran off the road, but you can't blame neoliberalism for these problems. In most of the world the problem is not enough capitalism rather than too much. Attacking neo-liberalism runs the high risk of putting economic policy onto a political rather than a scientific footing.

Bernanke, Inflation and the Suppression of M3 Money Supply Data: In November 2005, several weeks after Bernanke was named as chairman, the Fed announced that publication of the broad "M3" money supply data would be discontinued in March 2006 because it was "duplicative." It wasn't, because the M3 measurement is much broader than the other two yardsticks (M1 and M2). More importantly, over the last two years, M3 has ballooned to a 15-16 percent annual growth rate. These no longer official computations mocked Bernanke's pretenses that inflation was low and under control. Indeed, the investment firm of Stifel Nicolaus just published charts showing how closely the 2001-2008 oil price surge has related to the galloping growth in M3. Here, too, the legal question becomes: What did Bernanke know about inflation and the suppression of M3 and what was his personal involvement?

I disagree on a number of points. Most emphatically where you seem to think that "the alternative to neoliberalism is socialist planning." This is a crude dichotomy to say the least. Valid in point but in large part incorrect or at the least wildly imprecise. The alternative to neoliberalism is highly variable and seriously advocating a reduction in what would come under a reasonable definition of neoliberalism does not necessarily advocate any particular modification to democratic capitalism per se.

When you begin to look at things like recent history as a general decrease in regulation, a weakening of the labor unions, lowering of taxes on corporation, and a general empowerment of the corporate business model through the severe reduction in Government involvement. The changes we have been seeing in the American business and social atmosphere seem to suggest a strong reversal of these values.

"Distorting the allocation of resources," is exactly what we are beginning to see under Obama, saying that using American sources of resources such as iron and steel to revamp your infrastructure will become a contractual necessity. We have been talking about the need to, and the obvious failure of the current system (social, political, and economic) to move away from the highly impersonal and robotic fascination with optimizing value, perhaps we are seeing the beginning of a newer shared-cost mentality? Where goods and services don't need to be cheapest but best for all.

New Deal-type incentives for home ownership have gone spectacularly bust

Oh, just recently?

Quote:

...you can't blame neoliberalism for these problems.

I disagree, lots of people are looking to the reforms introduced Reagan and Thatcher style then carried diligently by Greenspan et al for blame.

[hr]

I guess the point you have to argue is why exactly a moderate amount of socialist style planning would do a great disservice to the American social-economic model (however rigidly you define it), especially now that neoliberalism has obviously failed to provide needed strength and integrity on so many fronts?

I disagree on a number of points. Most emphatically where you seem to think that "the alternative to neoliberalism is socialist planning." This is a crude dichotomy to say the least. Valid in point but in large part incorrect or at the least wildly imprecise. The alternative to neoliberalism is highly variable and seriously advocating a reduction in what would come under a reasonable definition of neoliberalism does not necessarily advocate any particular modification to democratic capitalism per se.

Defining the difference between 'democratic capitalism' and 'neoliberalism' is problematic. I am a fan of Friedrich Hayek, notably of his view that "the efficient exchange and use of resources can be maintained only through the price mechanism in free markets.... In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible." This seems to me the essence of neoliberalism. Departure from the price mechanism tends to provide political support to vested interests, undermining both broad based economic growth and sustainable poverty reduction. The US departed from the price mechanism in tax-deductibility of mortgage interest and in failure to price collateralised debt obligations. Nothing neoliberal about either policy.

Quote:

When you begin to look at things like recent history as a general decrease in regulation, a weakening of the labor unions, lowering of taxes on corporation, and a general empowerment of the corporate business model through the severe reduction in Government involvement. The changes we have been seeing in the American business and social atmosphere seem to suggest a strong reversal of these values. http://www.canberratimes.com.au/news/na ... 22838.aspx

Interesting that you should quote the Australian Prime Minister Kevin Rudd as an authority in the American economic debate. He also warned in this article, published today in The Monthly, not to throw the baby out with the bathwater, but then did precisely that by lumping all the sins of the boom under the catchall heading of neoliberalism.

Quote:

"Distorting the allocation of resources," is exactly what we are beginning to see under Obama, saying that using American sources of resources such as iron and steel to revamp your infrastructure will become a contractual necessity. We have been talking about the need to, and the obvious failure of the current system (social, political, and economic) to move away from the highly impersonal and robotic fascination with optimizing value, perhaps we are seeing the beginning of a newer shared-cost mentality? Where goods and services don't need to be cheapest but best for all. http://news.google.ca/news?q=obama+prot ... -8&rls=org.

This protectionist trend is highly unjust. By saying that people cannot buy from the most efficient supplier, President Obama is forcing customers to subsidise inefficient businesses. Obviously there is enormous political weight behind this new protectionism, but that doesn't make it rational or right.

Quote:

"The real problem is how to regulate a free market." Isn't it though.

What do you mean by this?

Quote:

"New Deal-type incentives for home ownership have gone spectacularly bust" Oh, just recently?

The underpinning of the subprime lending crisis is the idea, with roots in Roosevelt, that everyone can own a home even if they can't afford it.

Quote:

... "you can't blame neoliberalism for these problems." I disagree, lots of people are looking to the reforms introduced Reagan and Thatcher style then carried diligently by Greenspan et al for blame.

But how much is it the neoliberalism of Reagan and Thatcher that is to blame for their dubious legacy? There was little that was neoliberal about the massive expansion of the American military orchestrated by Reagan. My impression is that their neoliberal ideas got caught up in a bigger political agenda of class war, and then tarnished by guilt with association

Quote:

I guess the point you have to argue is why exactly a moderate amount of socialist style planning would do a great disservice to the American social-economic model (however rigidly you define it), especially now that neoliberalism has obviously failed to provide needed strength and integrity on so many fronts?

Socialism has also been tried and failed, even more spectacularly with the collapse of communism. The point is to consider policies on their merits, based on quantitative analysis of their effects. Using 'neoliberal' as a tar brush serves to discredit sound policies such as low inflation, high savings and incentive for investment, which are the basis of economic growth. The US is better off debating and defining sound policy than looking for catch-all ideological targets for blame.

"Socialism has also been tried and failed, even more spectacularly with the collapse of communism."

Again you draw extremely crude comparisons, you seem incapable of looking at the situation in perspective, the perspective of reality. You may not realize it but you are the only one who has mentioned socialism so far.

Rudd came up in a Google news search for neoliberalism, I had no idea his banker would be critical of his criticisms.

The point was not neoliberalism per se, the point was a shift in thinking as the old conceptualization is disproven to the new through trial and error. This is irrefutable, neoliberalism can have whatever significance any person wishes to place in it, the fact is that it is in decline as another failed attempt. It is in no way radical or unreasonable to say good riddance.

. Attacking neo-liberalism runs the high risk of putting economic policy onto a political rather than a scientific footing.

Robert, help me out with just one thing. Phillips talks about the failure of the market to properly, in its automatic way, value these asset-based products that have caused our problems. Isn't this indeed a failure of the free market, one that the faithful didn't think was possible until too late?

"Socialism has also been tried and failed, even more spectacularly with the collapse of communism."Again you draw extremely crude comparisons, you seem incapable of looking at the situation in perspective, the perspective of reality. You may not realize it but you are the only one who has mentioned socialism so far. Rudd came up in a Google news search for neoliberalism, I had no idea his banker would be critical of his criticisms. The point was not neoliberalism per se, the point was a shift in thinking as the old conceptualization is disproven to the new through trial and error. This is irrefutable, neoliberalism can have whatever significance any person wishes to place in it, the fact is that it is in decline as another failed attempt. It is in no way radical or unreasonable to say good riddance. http://www.globalresearch.ca/index.php? ... &aid=12120

"The perspective of reality" is highly contested, which is precisely why I originally drew attention to your sweeping condemnation of neoliberalism as a catchall description of the sins of the boom. This is quite wrong, as many practices in the boom ignored the price signals which would have alerted neoliberals to the danger. I mentioned socialism because in economic theory it is the only real alternative to neoliberalism.

DWill wrote:

Robert Tulip wrote:

. Attacking neo-liberalism runs the high risk of putting economic policy onto a political rather than a scientific footing.

Robert, help me out with just one thing. Phillips talks about the failure of the market to properly, in its automatic way, value these asset-based products that have caused our problems. Isn't this indeed a failure of the free market, one that the faithful didn't think was possible until too late?

Yes you are right, and of course Bush and Clinton did distort policy for political ends which caused the bubble. However, economic theory should not be primarily a matter of faith, as that way lies grief. My view is that a strongly evidentiary approach to economics will see that neoliberal approaches, emphasising fair competition under the rule of law, are the most efficient and effective.

"I mentioned socialism because in economic theory it is the only real alternative to neoliberalism."

Amazingly you state these opinions seemly knowingly yet in reality you display an elementary grasp at best as to the true impacts of the system and its effects on the western economy. I suggest you start with a Wikipedia search, read the full article, continue down and carry on with other readings. If you don't really know what neoliberalism means in terms of a liberal democracy how can you relate its absence to anything?

Quote:

"The perspective of reality" is highly contested

Under what terms, or do you honestly see a subjective contest in some time of modern power struggle between strongly polarized capitalism and communist idealisms?

On a personal note I find it offensive to have an apparently educated person pursue irrelevant connections to absurd conclusions doggedly in blind disrespect to the reality of the western economic situation and political reality as expressed in the book. Claiming that a socialist second coming is the logical result to a moderation in economic neoliberalism is laughable.

Grim, My point is that you started off by blaming neoliberalism, whereas I would say the distorted implementation of neoliberal ideas is to blame for the predicament. I stand by my view, based on the arguments in Hayek's The Constitution of Liberty, that there is no alternative to neoliberal economics other than ideas derived from socialism. You seem to be accepting the caricatures of neoliberal thought put up by its political opponents, although political debate happens at a very general level where words harden into symbols of opposing camps. I am not trying to place myself in the neoliberal camp in the Bush sense, only to say that sweeping denunciations are dangerous and wrong. Of course, 'communist idealism' is obsolete, but I would argue it continues to inform social democratic political thought in ways that are often hidden.

You seem to have the propensity for easily and willingly confusing ideology and reality in argument.

A theory is only valid until it has been disproven. And the proof is in the pudding on this one. You shy from allying yourself with Thatcherism and Bushonomics yet it is precisely The Constitution of Liberty and similar ideas which have given these people theoretical and rhetorical legitimacy. You claim that "sweeping denunciations are dangerous and wrong" on one hand, with the other you exaggerate the meaning of my original statement while practicing a one-sided ideological rhetoric. Including most notably, but not limited to the distribution of gross blanket falsehoods in phrases that often lack meaning. "Communism...it continues to inform social democratic political thought in ways that are often hidden." Lets be clear as to who exactly is making the "sweeping denunciations" here. Especially as it becomes apparent that you have not done your homework as to the results of this particular right-wing ideology. While you claim that I am seeing apparitions, it is you with your head in the sand that is left clinging onto ideas fast becoming obsolete. As they should be.

Grim, as you suggested I had a read through http://en.wikipedia.org/wiki/Neoliberalism It just reinforced my existing opinion that the most free countries are by and large the happiest. I am happy to make sweeping denunciations of communism as it was a vile experiment that directly killed millions of people and induced stagnation and suffering on a grand scale. You can't say that about neoliberalism. I am not exaggerating your statement, which was "rejection of neo-liberalism... appeals to common sense." I am just disagreeing with it.

I see you will continue to attribute one thing to the results for everything despite continued efforts on my part to point out that you have been on a different topic here all along.

The extremely obvious point I have been making continues to be that neoliberalism is not going to disappear and be replaced somehow by communism as you believe it will. The point has been all along that neoliberalism is in real decline under Obama's liberalism (two different isms completely) which is now a reality. You typify the ideologically blinded black and white thinker who would find it difficult or impossible to imagine any type of compromise while pounding out loudly for the only side he knows. The point is to look at the benefits and failings of all realistic and practical systems and attempt to foster the benefits with the least side-effects of the negatives and realize that all system ideas are temporary and need frequent revision to remain viable. You prove incapable of this reasonable task in that you are unwilling to acknowledge the scope of the topic, the context of the words or the unidefinably complex nature of the system to highlight but a few.

The point to me seems to be not to stop discussing rather to try using different ideas for each successive argument rather than repeating the same mantra over and over.

Last edited by Grim on Fri Feb 06, 2009 8:28 am, edited 2 times in total.

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